CHART OF THE DAY: What Happens In Phase 3

09/18/20 08:28AM EDT

Below is a chart and brief excerpt from today's Early Look written by Senior Macro Analyst Darius Dale.

On balance, this is the worst week of data in at least three weeks. On the positive side of the ledger, the trending improvement in our JOBS indicators that began in earnest in early-August continued. You can see in the Chart of the Day where these particular time series all turn Positive RoC green (hint: it’s right around when Enhanced Unemployment Insurance benefits expired). That our SENTIMENT, MOBILITY, and COMMERCE measures all transitioned from pink to green subsequent to the accelerated improvement in JOBS makes a lot of sense from a behavioral perspective.

On the negative side of the ledger, this is the first week in which all four of our COMMERCE trackers decelerated WoW since Phase 2 began when we said it would in late-APR. It’s bad form to overreact to one month of data, let alone a single week, so I’m not going to do that. Instead, I’ll anchor on the ongoing negative CREDIT impulse(s) as a precursor to what is likely to occur in throughout Q4 – especially amid a backdrop of concurrently negative fiscal and monetary impulses.

All told, we continue to think USA Phase 3 = Quad 3, with Quad 4 being the second most likely outcome in conditional probability terms at 56.7% and 40.8%, respectively. Notice I did not say Quad 2 or Quad 1 – the latter of which represents the regime currently implied by Bloomberg consensus estimates. To my friends on Ye Olde Wall: best of luck positioning for that into an electoral process that could take months beyond November 3rd to decide our next POTUS (per @Hedgeye Demography Sector Head Neil Howe)!

CHART OF THE DAY: What Happens In Phase 3 - Chart of the Day

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